Modi – government has shown enormous fiscal rectitude by meticulously managing both its receipts and expenditure thereby sticking to the fiscal consolidation road-map during its tenure. Its efforts are all the more praiseworthy when one recognizes that it has achieved these results without compromising on much needed boost to capital expenditure and funding social welfare schemes. However, hidden behind this is the oil bonanza made available since mid – 2014 [a wonderful coincidence as Modi took charge around this time i.e. on May 26, 2014] which it has leveraged to its full advantage. India imports about 80% of its oil requirements and therefore, the international price of crude hugely impacts the pricing and resource mobilization from oil products. The price...
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Category: Fiscal deficit/subsidies
NPAs – is the axe falling on common man?
Under the erstwhile UPA – dispensation particularly during its second consecutive tenure 2009-2014 [this is the time when ‘crony capitalism’ had reached its nadir], public sector banks [PSBs] recklessly gave loans to corporate houses/businesses without assessing the viability of the projects and conducting due diligence. Ten of thousands of crores were pumped into power, steel, telecommunications, textiles and infrastructure. The ability of the concerned projects/businesses to generate required cash to service the loans was in doubt from the day one. There was an element of ‘inevitability’ in such loans becoming non-performing assets [NPAs] [if an installment is not paid within 90 days from due date, the account is treated as NPA]. Indeed, these did become NPAs but were not recognized...
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Don’t permit loot in the garb of privacy
The unanimous decision of the 9 judge constitution bench of the Supreme Court [SC] pronouncing right to privacy as a fundamental right as an integral part of the Article 21 [grants the right to ‘life’ and ‘liberty’] of the Constitution has been welcome by all sections – including the union government. Prior to this, the position was vague as the founding fathers of the Constitution did not ‘explicitly’ provide for right to privacy as a fundamental right. An eight-judge bench of SC in M P Sharma’s case [1954] said so and the position was reiterated by a six-judge bench in Kharak Singh’s case in [1962]. The present decision by 9 judge bench overrules those two verdicts and lays down...
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Aadhaar – citizens’ welfare versus privacy
Even as Modi – dispensation is pulling all stops to deliver good governance, a major stumbling bloc is intervention by the judiciary; courtesy, a spate of PILs [public interest litigation] on almost every issue that concerns administration and delivery of public services. Unlike the executive where once a decision is taken, it gets implemented within a given time frame [under present government, things are happening in a fast track mode], any matter coming to the court for its decision inevitably gets delayed. A case in point is use of Aadhaar for dispensing various services. The Unique Identification Authority of India (UIDAI), established by UPA – II in 2009, issues Aadhaar cards to the citizens. Under the scheme, every citizen is...
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ONGC-HPCL deal – milching in garb of merger
The Cabinet Committee on Economic Affairs [CCEA] has taken an in-principle decision to divest 51% of Union Government’s shareholding in Hindustan Petroleum Corporation Limited [HPCL] – a downstream central public sector undertaking [PSU] – in favor of Oil and Natural Gas Corporation [ONGC] – a PSU in upstream segment. A group of ministers [GOM] under finance minister, Arun Jaitely has been set up to work out the modalities. The merger is expected to be completed within the current year. The decision is a follow-up of the announcement by Jaitley in his budget speech for 2017-18 to create 2 or 3 integrated oil and gas companies by merging existing PSUs which can compete with energy majors in the private sector –...
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GST – gas in, what about others?
Prior to the launch of most revolutionary reform post-independence viz. Goods and Services Tax [GST] on July 1, 2017, finance minister, Arun Jaitely had alluded to the GST Council – all powerful body mandated to decide on tax rates, inclusions/exclusions, exemptions etc – taking up for consideration inclusion of natural gas within the ambit of GST. The idea was to do it in the 18th meeting just before the launch but it appears to have been deferred. Keeping in mind Jaitely’s assurance that Council is open to making changes to accommodate genuine concerns, hopefully, this should happen sooner than later. It is important to understand as to why it must happen without slightest of delay. But, first, a few words...
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Reforming subsidy regime – what makes Modi helpless?
Three years at the helm, prime minister, Modi has been in absolute command at delivering on good governance, dismantling archaic laws, streamlining processes, simplifying procedures, cutting bureaucratic red-tape, reforming institutions, using technology for ‘transparency’ in decisions and above all not letting an iota of corruption happen in any department. These far reaching changes will have a ‘profound’ and ‘sustainable’ impact on the way government does business with stakeholders from all sections of the society. However, virtual absence of policy reforms especially in key sensitive areas such as fertilizers, food, power and oil which also happen to be resource guzzlers continues to be a matter of serious concern. These sectors suffer from structural weaknesses which will not go away merely by...
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GST – old wine in a new bottle
With India getting ready for launch of Goods and Services Tax [GST] – the most revolutionary reform ever undertaken since independence – in just over a month from now i.e. July 1, 2017, while expectations run high with the political class, corporate and investors [including foreign investors] seeing big gains, it is time to introspect whether this will deliver on the intended outcomes. The GST architecture that has finally emerged – after a series of brainstorming sessions by all powerful GST Council – is hamstrung by a number of inhibiting features which could impede realizing the full potential of this reform in terms of boost to GDP [gross domestic product], buoyancy in tax revenue, lower inflation and increase in competitiveness...
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Rating agencies are biased but, India needs to introspect
The chief economic adviser [CEA] to Government of India [GOI], Dr Arvind Subramanian has lambasted international rating agencies for their continuing to give low sovereign rating to India despite surging growth, substantial improvement in its macro-economic fundamentals and reforms gathering momentum. At the same time, they continue to give high ratings to countries such as China despite deceleration in growth, deteriorating macro-economic fundamentals and fiscal situation [for instance, debt to GDP ratio in China is 250% as against 69% in India]. Even in developed countries viz. USA, France, Spain, UK etc debt to GDP ratio is well above 90% and yet, they enjoy high rating. The rating assigned by these agencies not merely reflects on relative standing of India vis-à-vis...
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Aadhaar use for nation building – vetoed by judiciary
Vide the Finance Bill for 2017-18, the union government amended the Income Tax Act [1961] by inserting Section 139AA to make seeding of PAN number with Aadhaar mandatory. Henceforth, for financial year 2016-17 [assessment year 2017-18] onwards, it won’t be possible to file IT return using PAN not authenticated with Aadhaar. Further, no fresh PAN will be issued unless the applicant submits his/her Aadhaar number. The validity of the above amendment has been challenged in the Supreme Court [SC] who has questioned government’s decision to make Aadhaar card mandatory in view of its earlier order to make it ‘optional’. At the outset, it is important to ask as to why the government was forced to take such a decision. It...
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